13/04/2026 (The Star Online), Kuala Lumpur - The ongoing Middle East conflict is a double-edged sword for the nation’s palm oil industry, says the Malaysian Palm Oil Board (MPOB).

This is because, while the conflict is driving up crude palm oil (CPO) prices to new heights, it is simultaneously compressing export profit margins due to skyrocketing logistical costs.

MPOB director-general Datuk Dr Ahmad Parveez Ghulam Kadir said CPO prices have experienced a “notable upward trend” since late February following the start of the conflict.

From an average of RM4,018.50 per tonne in January, he said CPO prices have risen to RM4,758.50 per tonne as of April 7.

However, he noted that the profits are not as large as the CPO headline prices suggest.

“The rerouting of vessels around the Cape of Good Hope has increased voyage distance, fuel use and overall delivery costs, especially for longer-haul destinations. As a result, the gains from stronger CPO prices are being partly offset by higher logistics-related expenses,” he told The Star.

While profit margins are not totally erased, they face significant compression due to soaring freight charges, war-risk insurance premiums, longer transit times and added uncertainty in shipment scheduling, he added.

Ahmad Parveez said that exporters operating under cost, insurance and freight (CIF) contracts are feeling the pressure, while those under free on board (FOB) arrangements remain relatively insulated.

“The present market is favourable for prices but not without significant cost pressure on exporters,” he added.

The shipping detour around Africa adds 10 to 14 days to transit times, raising concerns that exporters here may lose out to competitors who are closer to the crucial Middle East and North Africa markets, he said.

Despite the hurdles, Ahmad Parveez remains optimistic that Malaysia will not suffer a structural loss of market share.

“Palm oil remains an essential and price-competitive edible oil in many of these markets and global vegetable oil supplies are not abundant enough for buyers to switch freely without cost implications,” he said.

In the near term, he expects importers to absorb part of the higher landed costs while adjusting to longer transit times, though he warned the risk could worsen if disruptions become prolonged.

Beyond shipping, the Middle East crisis has also sparked concerns about global fertiliser supply disruptions.

He said that a prolonged disruption beyond the first six to 12 months could affect future crop yields.

A silver lining to the Middle East tensions, he said, would be an increase in demand for palm-based biodiesel, particularly in Indonesia.

Ahmad Parveez pointed out that Jakarta is looking at accelerating its B50 biodiesel mandate by July 1, which will absorb a massive portion of its domestic palm oil supply.

“By constraining supply in the international market, the policy indirectly enhances Malaysia’s export prospects and provides a more favourable environment in managing our stockpile,” he said.

Domestically, Malaysia’s own blending mandate expansions are expected to absorb a moderate 1.0 to 1.5 million tonnes of stockpile in the near term.

Biodiesel blending mandates are policies requiring a specific percentage of renewable fuel, such as palm oil-based methyl ester (PME), to be mixed with fossil diesel.

Rising diesel prices in Malaysia, driven by the Middle East conflict, are accelerating the push for higher biodiesel mandates to cut costs.

https://www.thestar.com.my/news/nation/2026/04/13/gains-offset-by-logistics